Social Responsibility and Firm's Objectives
Sciences Po Economics Discussion Papers
Paris : Département d'économie de Sciences Po
Sciences Po Economics Discussion Papers : 2020-01
Objectives of the firm, Corporate Social Responsibility, Donations, Structural Estimation, Externalities
This paper shows that a firm’s objectives can extend beyond profit maximization. I use data from a for-profit firm offering charity auctions of celebrities belongings whose donations affect both revenues and costs. Comparing actual donations with the profit-maximizing benchmark indicates that the firm donates in excess of profitmaximization. I provide additional evidence pointing to donations as a further objective of the firm. Also, donations do not substantially increase willingness to pay, indicating that demand cannot explain expenditures in CSR. My results shed light on the functioning of benefit corporations and open questions on the competitive conduct of non-profit maximizing companies.